Managing an investment property can seem appealing if you live locally or if you want to avoid Real Estate costs. However it also comes with a range of responsibilities that you should be aware of before making a decision. If you self-manage a rental investment property you will be responsible for:
Advertising for tenants can be fairly straight forward online using listing websites such as realestate.com.au or domain.com.au. Make sure you consider the time it will take to maintain your rental listing online and review applications. When choosing a tenant it's important to check that they can afford your rent and that they have a good rental history. To help with that verification, you could check your tenants rental history through an online provider such as rentcheck.
If you don't get much interest online, you might also need to invest some money to promote your advert elsewhere, such as your local newspaper.
To arrange the lease agreement, you'll need to be across the specific rules and regulations for your area for your State or Territory.
There will be some paperwork that you have to fill out and go through with the tenant before they accept the agreement. You may decide to offer a fixed rental term of 6 or 12 months which gives you stability of rental income for a period of time. You might also choose a rolling agreement. This could allow the tenant to leave without much notice leaving you short on rent.
You must legally lodge your tenants bond with your respective bond authority. While it's not uncommon for Landlords to forgo these formalities, it's very important to have a formal lease agreement and bond in place. This protects you and your tenant so if anything goes wrong, there is a contract in place and structured dispute resolution processes.
Keeping communication lines open over email or phone will allow your tenants to quickly advise you of any maintenance issues with the property. In your State or Territory there will be rules around how much notice you need to give your tenant before inspecting a property or completing repairs. You'll need to adhere to these rules before entering the property, which may include providing written inspection or entry notices days or weeks prior to your visit.
It will be your responsibility to ensure that repairs are undertaken in a timely manner at the property and that you comply with entry rules for your area. You'll also need to keep track of whether the damage was caused by your tenant or whether its general maintenance. For example:
Tenants responsibility: If a tenant breaks a window by throwing a ball through it, they are responsible and have to pay for repairs.
General maintenance: If a window falls out of the frame, and breaks, due to ageing putty that may be fair wear and tear and you'll have to pay.
In addition to ongoing repairs, make sure the property is fitted with Smoke Alarms that are working and inspected regularly in accordance with your State or Territory requirements.
Make sure you set up Landlord Insurance to insure your property for any unexpected events such as storm damage or fire.
Usually when properties are professionally managed by a Property Manager, they have an automatic accounting system in place to tracks rental payments. These systems notify the Property Manager when rent has not been paid which enables the Property Manager to send a follow up or overdue notice.
When you manage the property yourself, you'll need to keep track of whether rent comes through on time. If it doesn't come through, you'll be responsible for sending unpaid notices. This great article explains breach notices in more depth but make sure you refer to the rules in your State or Territory.
Last but not least, you'll need to keep all your receipts and paperwork for your tax returns to ensure you are claiming what you can for managing your property.
You may decide to pay a professional to manage these jobs for you – such as a Real Estate Agent. However, it is still important for you to keep a pulse on what’s going on with your investment property. This way you will have confidence to make future decisions about the direction you want to take with your investment.
Thinking of investing in property? Check out our investing in property hub for more helpful tips. If you're ready to talk about an investment loan, enquire online or talk to one of our lending specialists today to find out more about our great home loan rates. Visit your local branch or phone 13 14 22.